Tuesday, August 13, 2013

Siri, does this complaint state a claim?

The court dismissed consumers’ claims based on Siri’s
failure to perform as well in real life as it did in ads, but granted leave to
amend.Apple allegedly advertised the iPhone
4S with heavy emphasis on how good Siri was at interpreting voice
questions/commands, e.g.:

if you ask “Will I need an umbrella
this weekend?” it understands you are looking for a weather forecast. Siri is
also smart about using the personal information you allow it to access, for
example, if you tell Siri “Remind me to call Mom when I get home” it can find
“Mom” in your address book, or ask Siri “What’s the traffic like around here?”
and it can figure out where “here” is based on your current location.

During an interactive demo, Siri responded promptly and
appropriately to questions and requests, such as displaying the time in Paris,
setting an alarm for the next day at 6 am, and finding a “great Greek
restaurant” in Palo Alto.Apple claimed
that Siri was easy to use and didn’t require precise wording, though various
speakers mentioned that Siri was in beta/not perfect.

Its national ad campaign showcased Siri; 4 out of 7 recent
TV ads focused solely on Siri, including showing it understanding and
responding to a voice command given by a person who was running and showing it
answering the question “[How do I play] a B Minor Ninth?” with the proper
notes, chord and sheet music. Likewise, in response to, “Tell Julie and Kate
our band is playing at the garage tonight,” Siri stated, “Here is your message
to Julie and Kate,” and immediately showed on the user’s iPhone 4S screen a
message to “Julie, Kate” that read “Our band is playing at the garage tonight.”
Its website also touted Siri as a major selling point.

Plaintiffs alleged that they bought an iPhone 4S in reliance
on Apple’s claims about Siri, but found that it didn’t perform as advertised
and couldn’t answer specific questions such as ones asking it to compare the
fat content between two meals, to find the location of a children’s party
venue, to find information related to the “guided reading” teaching method and to
provide directions to a doctor’s office located in Brooklyn.Another plaintiff attempted to mirror the
commands shown in the ads, with no success. For example, he asked Siri: “how do
you play an A chord?” and Siri answered, “OK, how about a web search for ‘how
do you plan a quart?’ ” “How do you play a B minor chord?” got, “looking for B
minor chord,” followed by “still thinking,” and eventually responded, “Sorry, I
couldn’t find B minor chord in your music.” Another plaintiff found that, when
he tried to make phone calls or send emails, Siri repeatedly gave the wrong
names and numbers of people that he was trying to contact. When he asked, “When
is St Patrick’s Day?” Siri responded, “Sorry, I don’t understand ‘When is St
Patrick’s Day.’”Etc.

Plaintiffs weren’t alone. The Huffington Post published an article, Apple’s
Siri ‘Rock God’ Commercial: How Accurate Is It, Really?, accompanied by a
video called A Scientific
Ex-Siri-Ment. This showed a blogger repeating every voice command prompt in
Apple’s “Rock God” commercial word for word, but Siri responded to only two of
seven prompts on the first try as it did in the ads, including one response
that came after an extreme time lag. In response to, “Tell Julie and Kate our
band is playing at the garage tonight,” Siri responded with “Are band is
playing at the garage tonight.”

Most of the marketing and advertising, including the TV ads,
didn’t mention the word “beta” or other limits on Siri, though a Siri FAQ
“buried” on Apple’s website stated “Siri is currently in beta and we’ll
continue to improve it over time.” Apple mentioned that Siri was in “beta”
without elaboration on several other pages.

Plaintiffs brought the usual California claims.The court took judicial notice of a few key
documents, but not those that were neither mentioned in the complaint nor that
consumers would have to have encountered (that is, it refused to take judicial
notice of the Siri Features Webpage, which Apple failed to show that users
would necessarily have seen).

Apple challenged the standing of out-of-state plaintiffs
Fazio and Balassone, who weren’t California residents and didn’t buy their
devices in California. This conflated the extraterritorial application of
California consumer protection laws (the ability of a nonresidential plaintiff
to assert a claim) and choice of law.California statutory remedies can be invoked when out of state parties
are harmed by wrongful conduct occurring in California, and here plaintiffs
alleged that all critical decisions about the allegedly misleading marketing
and advertising were made in-state.This
was sufficient at the motion to dimiss stage.Apple relied on Mazza to argue
that non-California plaintiffs lacked standing, but Mazza wasn’t a standing case.Certification of a nationwide class wasn’t before the court presently
and choice of law isn’t standing.Anyway, choice of law analysis must be done on a case by case basis; Mazza’s finding of material differences
in state law was based on the facts before it, not on a necessary conflict between
the laws of California and other states under any and all circumstances.

Apple then argued that plaintiffs failed to satisfy Rule
9(b).Plaintiffs did allege the contents
of some specific ads, including TV commercials, the press release, and statements
on Apple’s website.But plaintiffs
didn’t sufficiently allege how the statements were false or fraudulent and how
Siri failed to perform as advertised.They didn’t make clear whether their theory was that the ads were
misleading “because Siri never responds to questions or is always inaccurate,
does so more slowly than shown in the ads, uses more data than advertised or is
less consistent than shown in the ads.”They needed to better allege the “how” of the misrepresentations.They didn’t explain what exactly Apple led consumers to believe through the ads, through
what particular representations, or what was false about those
representations.They needed to specify
“how Siri failed to meet the representations that they claim Apple made, what
the truth about Siri’s performance actually was and how Apple knew or should
have known that these representations were false.”(Separately, the court dismissed the UCL
claims on similar grounds, this time framing it (of course) as an issue of
standing: plaintiffs failed to sufficiently allege how they’d lost money or
property as a result of specific misrepresentations.)

Perhaps assuming there’d be an amended complaint, the court
dealt with several of Apple’s other arguments.Apple also argued that plaintiffs were selectively reading its ads and
that it had adequately disclosed Siri’s beta status.Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995),
upheld the dismissal of UCL and FAL claims, rejecting as unpersuasive the
plaintiff’s argument that readers will read only the large print on a promotion
document and “ignore the qualifying language in small print.” In that case, the
promotions “expressly and repeatedly state[d] the conditions,” and none of the
qualifying language was “hidden or unreadably small”; it appeared immediately
next to the representations it qualified “and no reasonable reader could ignore
it.”Anyone who read enough to comply
with the instructions for entering the sweepstakes would be put on notice of
the qualifying language. But this set of allegations was quite different: the
commercials themselves didn’t disclose that Siri was in beta/unfinished; some
website pages did, but not all, and the disclosure was separated from the
primary discussion of Siri’s features.Though Apple might be able to show its qualifications as a defense, this
wasn’t enough as a matter of law to require dismissal.

Apple argued that many of the statements cited were puffery,
such as “the best iPhone yet,” “How do you improve on something so
extraordinary? Now we’re introducing Siri,” and descriptions of Siri as an
“amazing assistant,” “amazing,” and “impressive.” Plaintiffs rejoined that they
weren’t basing their claims on these statements, but rather on specific
representations of how Siri was supposed to function. The court agreed with plaintiffs.

Apple’s next argument was that plaintiffs failed to specify
on which particular ads they relied.One
plaintiff specifically alleged that he relied on “the statements and
interactive demonstrations performed at Apple’s October 4, 2011 press
conference,” but also that he relied upon “other representations,” without
saying which others, and the others didn’t specify even that much, just
alleging reliance on TV ads, “various” presentations, and the website.Plaintiffs argued that the misrepresentations
“were part of a consistent, broad marketing campaign by Apple over time,” so they
were “not required to specify each and every time they were exposed to one of
Apple’s misrepresentations.” But Tobacco
II, on which they relied, didn’t and couldn’t support relaxing Rule 9(b)’s
pleading requirements, and anyway this wasn’t a years-long ad campaign.

Apple’s next argument was that there could be no CLRA claim
because the Siri software isn’t a good or service.The court went with plaintiffs: the subject
of their claims was the iPhone 4S itself, a good, and Siri was a feature
thereof, so that Apple represented the iPhone 4S to have characteristics and
features that it didn’t have, etc., as proscribed by the CLRA.The CLRA claim wasn’t based on the download
or purchase of software.

On the breach of express warranty claim, California requires
pre-suit notice within a reasonable time after discovery of the breach, and
failure to comply bars the buyer from any remedy.In order to fulfil its purpose of allowing
nonjudicial resolution, notice must be served prior to service of the
complaint.For one plaintiff, the letter
allegedly providing notice was sent on the same day the original complaint was
filed, and couldn’t serve as notice.Thee other plaintiffs sent a letter four days before their complaints
were filed, but these letters weren’t alleged and the plaintiffs didn’t request
judicial notice.They argued that Apple
was on notice of the defects from numerous media reports, but cited no
precedent in which notice from media outlets met the statutory notice
requirement.

Under California law, any affirmation of fact or promise
that becomes part of the basis of the bargain creates an express warranty, but
plaintiffs must plead the exact terms of that warranty, and here they
didn’t.General assertions of reliance
on a commercial or ads aren’t equivalent to identifying the exact terms of a
warranty. At least, plaintiffs needed to allege the particular commercials and
webpages they relied on, describe their content with particularity, and allege
reasonable reliance thereon with specificity. “Plaintiffs’ allegations at this time are not
sufficiently detailed to provide Apple with meaningful notice of which
particular advertisements and webpages form the basis of their claim, or of
what warranty terms Plaintiffs maintain were created by those commercials and
pages.”

Plaintiffs also alleged breach of the implied warranty of
merchantability: that the goods would be fit for their ordinary purposes. Apple argued that it disclaimed the implied
warranty of merchantability in its one-year hardware warranty and software
license agreement.Disclaimer is an
affirmative defense that can only be raised on a motion to dismiss if it raises
no disputed issues of fact, and requires that the buyer must know or be
chargeable with notice of the disclaimer before the bargain is complete.Apple argued that its disclaimer was in the
iPhone 4S packaging, and customers could’ve returned their iPhones within 30
days after they reviewed the warranty if they didn’t want to consent.There was some precedent supporting this
method of disclaiming the warranty, but plaintiffs didn’t plead that there was
an unqualified return period and Apple provided no evidence suitable for judicial
notice.

This didn’t matter, though, because plaintiffs didn’t
plausibly plead that the iPhone 4S’s “ordinary and intended purpose” was to use
Siri “to send messages, schedule appointments, seek information and directions
and to learn new tasks,” instead of being a cell phone. The iPhone 4S’s intended and ordinary use was
as a smartphone, for calls, text messages, and mobile apps, and plaintiffs
didn’t allege that the iPhone 4S was deficient in any of those functions—just
in providing Siri to access those functions.

Regardless, even if using Siri was part of the ordinary
purpose of the phone, plaintiffs didn’t sufficiently plead breach.They alleged that Siri was usable to some
extent, but wasn’t “a consistent intelligent assistant.” Breach of the implied
warranty of merchantability requires a showing that the product “did not
possess even the most basic degree of fitness for ordinary use.” Because
plaintiffs didn’t allege that the function was unusable, the court granted the
motion to dismiss this claim, albeit with leave to amend.

The alleged violation of the Magnuson-Moss Warranty Act fell
with the alleged state law violations, and the unjust enrichment claim went
because it wasn’t a standalone cause of action.

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